(d). The approximate sterling equivalent of currency over- drafts " Nostro " abroad at banks in each country.
No British firm or institution was permitted to work in ex- change in joint account with a neutral firm or institution. It was not permissible to execute an order for a neutral to buy or sell foreign exchange unless it was stated for whose account the order was given. It was not permissible for exchange dealers to keep in foreign countries more than the minimum cash balances necessary for keeping their accounts open. An official list was sent period- ically to all exchange dealers from the finance section of the Minis- try of Blockade containing the names of persons and firms whose transactions it was undesirable to facilitate or finance. The last of these lists (colloquially known as "Black Lists"), which was circulated in Dec. 1918, contained no less than 10,000 names of persons or firms with whom it was not permitted to trade either directly or indirectly. It was not permissible to telegraph in cypher, though as a concession when ordering telegraphic trans- fers of money one private " check " word was permitted in each telegram, but this only to lessen the risk of fraud. (A few recognized codes in general use could, however, be employed, but the telegram had to commence with the name of the code and a small fee was charged by the censor.)
Troublesome these restrictions undoubtedly were, but they were not unreasonable; and foreigners, both Allies and neutrals, recognized that they were necessary and were not intended in any way to hamper them in carrying out their own legitimate trade. A large and increasing volume of orders to buy and sell foreign exchange came to the London market from the continent of Eu- rope and also from America, with the result that London never lost its preeminent position as the world's centre for foreign exchange. Indeed, the great increase in the volume of exchange transactions that started very shortly after the declaration of peace, when exchanges were decontrolled and all restrictions were removed, found England better equipped than ever before for maintaining its leading position.
In this connexion the three subjoined tables, A, B and C, for London business done on various foreign centres, are of interest. The first (A) shows the highest and lowest exchange quotations during a normal pre-war year, the second (B) gives similar quota- tions for a post-war year, and the third (C) is a record of the rates at which actual transactions took place on one day in 1921:
TABLE A. Pre-war Rates 1912.
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Method of Quoting.
Lowest.
Highest.
New York.
Dollars per pound
4-84H
4-88i
Paris .
Francs per pound
25-I3
25-29!
Brussels
Francs per pound
25-31
25-40
Germany .
Marks per pound
20-41 i
20-55
Amsterdam
Guilders per pound
!2-o6f
12-ioJ
Italy .
Lire per pound .
25-34
25-63
Madrid
Pesetas per pound
26-58
27-34
Stockholm.
Crowns per pound
18-17
18-29
Christiania
11 11 11
18-17
' 18-29
Copenhagen Lisbon
11 11 11 Pence per milreis
18-17 4 6id.
18-29 49fd.
Vienna
Crowns per pound
24-065
24-25
Bombay
Pence per rupee
is. 3 Ud.
is.4^d.
Buenos Aires
Pence per gold peso
48 Ad.
4 8Md.
England was by no means the only country where foreign exchange transactions were subject to strict State control. In Germany, in fact, restrictions were far greater than in England. In that country dealings in foreign exchange were confined, officially, to certain firms and banks, numbering in all 28, who were granted licences by the German chancellor permitting them to do that kind of business. The offiqes where such transactions were authorized were known as Divisenstellen or " Foreign Ex- change Offices." Official rates governing exchange transactions were fixed by the State Bank. These varied from time to time. Table D (on p. 42) gives the highest and lowest official Berlin rates for the years 1916, 1917 and 1918.
It will be noticed how very steady were the Austrian, Hun- garian and Bulgarian exchanges, especially during 1917. Even that on Constantinople varied only about 5 % during that year. If one compares these with the variations in the French, Italian
and American rates of exchanges as quoted in London in 1917, one will find that the German control was, on the whole, rather more successful, for although the difference between the highest and lowest quotations for the " pegged " dollar was barely j of i %, that for the French franc was about 2 J % and that for Italy was as much as 31 per cent.
TABLE B. Post-war Rates 1920.
Percentage of Vari- ation.
Lowest.
Highest.
Method of Quoting.
2 5'75 Montreal
3-65
4-59
Dollars per pound
25-19 New York
3'2ii
4-025
11 ii ti
68-83 Pa"s
40-75
68-80
Francs per pound
32-90 Holland
8-65
11-50
Guilders per pound
112-00 Italy
50-00
106-00
Lire per pound
52-26 Spam
18-98
28-90
Pesetas per pound
247-82 Portugal
5fd-
20d.
Pence per milreis
44-21 Norway
18-57
26-78
Crowns per pound
8-44 Sweden
17-07
18-51
11 11 11
32-20 Denmark
19-60
25-91
11 11 it
205-08 Finland
59-00
180-00
Finnish marks per pound
204-16 Germany
I2O-OO
365-00
Marks per pound
20-26 Switzerland
I9-40
23-33
Francs per pound
57-55 Belgium
40-40
63-65
11 11 it
96-85 Greece
25-40
49-50
Drachmas per pound
170-83 Bucharest
I2O-OO
325-00
Lei per pound
233-33 Vienna
480-00
1,600-00
Crowns per pound
246-15 Prague
I30-00
450-00
11 11 11
521-62 Warsaw
370-00
2,300-00
Polish mks. per pound
90-77 Rio de Jan-
eiro
9*L
l8Hd.
Pence per milreis
44-68 Buenos
Aires
Sold.
73ld.
Pence per gold peso
100-00 India
is.4fd.
2s. 9|d.
Sterling per rupee
29-02 Japan
2s. 4d.
33. o\d.
Sterling per yen
145-16 Shanghai
33. lod.
93. 6d.
Sterling per tael
2-60 Singapore
2s. 3d.
2s.4M
Sterling per dollar
TABLE C. Rates on Jan. 25 1921.
Percentage of Variation.
Lowest.
Highest.
9-00 Paris.
50-00
54-50
0-17 Amsterdam
n-39
11-41
8-27 Belgium .
47-75
51-70
0-80 Spain
27-50
27-72
3-71 Italy.
IOI
104!
0-16 Switzerland
24-04
24-08
0-91 Stockholm
17-46
17-62
2-05 Christiania
19-55
19-95
3-78 Copenhagen
18-50
19-20
0-52 New York
3-8o
3-82
0-46 Canada .
4-3
4-32
4-00 Portugal .
6id.
0-50 Buenos Aires
49ld
5oU
i-oo Greece
so
I -80 Finland .
ill
"3
9-35 Germany.
203
222
8-33 Austria .
1,200
I,3OO
Among the other difficulties that the German trader had to contend with were these: No German current coins or bank- notes were permitted to be sent abroad unless permission had been obtained previously from the State Bank. No German or foreign money could be sent abroad for the purpose of acquiring securities or merchandise of any description without the per- mission of the State Bank. This prohibition also extended to barter. No foreign credits of any description in German currency were permissible without the sanction of the State Bank. The Imperial chancellor had the power to authorize the State Bank to requisition from the possessor any foreign currencies, foreign balances or other " means of payment abroad," giving in exchange their full value in German marks at the official exchange then ruling. Persons or institutions acquiring or disposing of foreign exchange in any shape or form were obliged to give full in- formation as to the nature of the business in question to the State Bank, and the Divisenstellen were empowered to make it a condition that this information should be given before doing business with them. Persons infringing any of these regulations or found to be giving false information, rendered themselves liable to fines varying from 100 to 50,000 marks and to imprison- ment for periods not exceeding one year. In addition to this, the money or goods in question might be declared forfeit to the State!.
